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3 Stocks Bucking the Downtrend

Sort a real growth story from a flash in the pan.

Even on the market's worst days, buyout news and other short-term forces can send individual stocks up by 10%, 25%, even 50%.

For example, shares in GPS chipmaker SiRF Technology rose 55% when it was announced that British chipmaker CSR would merge with the company in an all-stock deal.

But beyond less-predictable events like that one are stocks with fundamentally compelling reasons for recent momentum. The trick lies in finding those stocks. That's where Motley Fool CAPS comes in.

The story behind the storyCAPS is no crowd of lemmings. Its best-performing members' opinions do more to shape each company's rating than the picks of their poorer-performing peers. Let's use the collective wisdom of more than 125,000 CAPS members to filter out the noise and find companies offering strong momentum.

We'll use CAPS' handy stock screening tool to quickly zero in on companies with a stock price increase of at least 20% in the past four weeks, a market cap of greater than $100 million, and a beta of less than 3. Below is a sample of stocks that our screen returned. If you'd like, run this screen yourself -- just keep in mind that results may change as the market does.

Game onProving that not every sector of the economy is in a freefall, Chinese Internet media and gaming company Sohu reported a 275% increase in fourth-quarter earnings, helped by an 86% increase in revenue to $121.6 million. The company reached its highest operating margin since 2003, at 38%, significantly higher than competitor SINA's (NASDAQ:SINA) 20% margin. The Chinese gaming industry has remained strong, as consumers choose affordable in-home entertainment over more expensive outings or alternatives. Reflecting this trend, revenue in Sohu's online gaming segment jumped 140% year over year.

While gangbuster growth continues, there are still significant risks in Chinese stocks -- China's weak advertising market and overall economic condition promise to keep the market volatile. But this is mostly a concern of investors who think short-term: Many CAPS members find comfort in Sohu's strong balance sheet and immense growth potential that should help it last through tough economic cycles. The company has accumulated more than $300 million in cash with no debt and expects strong revenue growth for 2009, helped by games like Tian Long Ba Bu and Blade Online. Several U.S. institutional investors, including Fidelity Management and Vanguard Group, have been accumulating sizeable stakes in the company as well. In CAPS, 95.6% of the 968 members rating Sohu.com expect it to outperform the market.

Going to marketForeign online marketplaces like Latin America's MercadoLibre continue to grow while the original online market eBay(NASDAQ:EBAY) shrinks in the face of challenges abroad. MercadoLibre reported full-year and fourth-quarter profit and revenue growth, with registered users rising to an impressive 33.7 million compared with 24.9 million the same time last year. Unlike eBay, MercadoLibre is growing in both its marketplace and payment platforms, and the company continues to expand across South and Central America.

Another trend is emerging, and some predict it will continue to grow: Online marketplaces are taking more of the advertising revenue once dominated by search engines. Chinese e-commerce site Taobao.com is chipping away at the merchant advertising market that would normally advertise through giants like Baidu(NASDAQ:BIDU). To hedge their bets, eBay is rooting for MercadoLibre's success as an investor, and Gmarket's and Taobao's success has prompted Yahoo! (NASDAQ:YHOO) to take a stake in each. Today, 94.5% of the 704 CAPS members rating MercadoLibre see it as having the right stuff to beat the market.

And you?What's your story? Whether you buy the tale of a stock that's soaring or souring, your own research is more important than collective opinions. But these collective opinions can make your due diligence a whole lot easier.

Add your take on these or any of the more than 5,300 stocks that our 125,000-plus members have covered in Motley Fool CAPS. It's totally free to be a part of the community, and the payback is more than worth it.

TheMotley Fool Stock Advisorservice looks for companies with strong management poised to beat the market over the long haul. To see all the stocks that have helped Tom and David Gardner beat the market by 29 points on average, take a free 30-day trial.

Fool contributor Dave Mock has his own story, but there's no "happily ever after" at the end of it. He owns no shares of companies mentioned here.MercadoLibre is aGlobal Gainspick. eBay is anInside Valuerecommendation. Sohu, Akamai, and Baidu areRule Breakersrecommendations. SINA and eBay areStock Advisorpicks.The Fool's disclosure policy has the momentum of a freight train, but can stop on a dime.